When purchasing a home in San Jose, there are certain regulations that must be followed in order to ensure the transaction is legal.
Home seller and buyer laws
Real estate property disclosure forms: In Santa Clara County, where San Jose is located, anyone selling a home with a wood-burning device must disclose health hazards of particulate emissions. To comply, they must fill out the “Residential Fireplace Disclosure,” which also must be signed and dated by the buyer upon receipt. In addition, sellers must disclose if the property complies with San Jose’s street tree maintenance and replacement requirements using the “Street Tree Disclosure” form. Furthermore, the state of California requires sellers to complete and provide a “Transfer Disclosure Statement” to buyers, informing them of the home’s features and amenities (such as appliances, alarm systems, water source, etc.); condition of said features and amenities; defects and malfunctions of structural, electrical and water components; and issues such as environmental hazards, zoning violations, citations against the property and any lawsuits against the seller that affect the property.
Judicial or non-judicial foreclosure state: In California, foreclosures may be judicial (through the courts) or non-judicial. Most common in California, non-judicial foreclosures enable lenders to utilize a power-of-sale clause in the mortgage terms to sell the home and pay off the loan balance. If there is no power-of-sale clause, lenders can file a lawsuit to get a court order to sell the property.
Community property or equitable distribution: California is a community property state, so each spouse automatically owns one-half of all property acquired during the marriage. Upon divorce, all property is usually divided equally between each party. Community property laws can impact you during the homebuying process, too, as some lenders, particularly for government-backed mortgages, consider spousal debt when evaluating creditworthiness, even if your spouse will not be on the deed or even residing in the property.
Closing process: Some states require buyers to hire an attorney to handle the closing paperwork; but in California, buyers may use an escrow agent, which can be an attorney, title company or other escrow officer, to prepare mortgage documents and clear the title.
Summary of real estate transfer taxes: For properties located in San Jose, real estate transfer taxes must be paid at the rate of $1.65 per $500. In addition, Santa Clara County charges a county transfer tax of 55 cents per $500.
Property tax exemptions: In Santa Clara County, homeowners can file for a property tax exemption of $7,000 off the assessed value of the property. The county also provides an exemption for disabled veterans of up to $100,000 off the assessed value. The property must be the principal residence for a qualified disabled veteran (totally disabled resulting from a service-connected injury or disease) or their surviving spouse. For low-income veterans, this exemption increases to $150,000. You can find out more about property tax exemptions in San Jose here.
Typical property taxes: The median property tax in Santa Clara County is $4,694 per year on a home valued at $701,000, according to Tax-Rates.org. Although not the highest property tax in California — that honor goes to Marin County, which collects an average of $5,500 per year — it is one of the highest nationwide.
Conforming loan limits
In San Jose, loan limits for one-unit homes are $726,525. Conforming loans are those that are backed by Fannie Mae and Freddie Mac, the government-sponsored enterprises that help stabilize the U.S. real estate market. Each year, the Federal Housing Finance Agency (FHFA) sets the conforming loan limits. The overall conforming loan limit is $484,350, but there are higher limits in pricey areas, such as California.